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HomeMy WebLinkAboutAngus Petroleum - 1994-12-1907-05-95 02:29PM FROM 111 TO CITY CLERK 1101 JAMES W. SIL,VA SUPERVISOR, SECOND DISTRICT ORANGE COUNTY HALL OF ADWNISTRATION 10 Glbly CENTER PLAZA. P O F30Y, W, SANTA ANA, CALIF014NIA 92702-0687 PHONE (,14) 814-3220 FAX (714) 834-o109 June 29, 1995 The Honorable Dave Garofalo Council Member -< City of Huntington Beach ` _��m 2000 Main Street " ' Huntington Beach, GA 92648 ;x Dear Dave. I write regarding a recent allocation of $375,000 from the Springfield Property Trust, According to a 1986 agreement, one third of trust payments are to go toward park purposes within one mile of the Springfield drill site, As you know, the Boys and Girls Club of Huntington Valley leases the one park in the area, McCallen Park, The club is responsible for the maintenance and landscaping of the park. I request that you and your council colleagues consider assigning the aforementioned payment to the Boys and Girls Club to assist in the retirement of their construction loan, In doing so, you would be fulfilling the intent of the 1986 agreement while helping a vital community organization. Thank you for your consideration of this action. Please contact me if you would like to discuss this matter. Sincerely, 4 &Si Supervisor, Second District JWS:RS CITY COUNCIL MEMO To: Connie Brockway - City Clerk From: DavidGarofaCo, CouncilMember Date: June 26, 1995 Subject: H-ITEMfor the July Sth Council Meeting Angus Oil, Springfield Unit Settlement Agreement Please agendize this memo as an H-Item under my name. There are members of the community who recall that an agreement was made between the City of Huntington Beach, Angus Oil, and the area residents during the negotiations for the trust that was established as part of the Angus Oil, Springfield Unit project. The agreement was to dedicate the City's one third portion of the trust to use on developing/improving park sites within a given radius of the Springfield Unit site. The only park site encompassed within that radius being McCallen Park where the Boys and Girls Club is located. I respectfully request that the Council review and discuss the attached correspondence regarding this matter. DG:PD xc: Mayor & City Council Members Michael T. Uberuaga, City Administrator Ray Silver, Assistant City Administrator ....::. CITY COUNCIL MEMO To: Connie Brockway - City Clerk From: DavidgarofaCo, CounciCMember Date: June 26, 1995 Subject: H-ITEMfor the July Sth Council Meeting Angus Oil, Springfield Unit Settlement Agreement Please agendize this memo as an H-Item under my name. There are members of the community who recall that an agreement was made between the City of Huntington Beach, Angus Oil, and the area residents during the negotiations for the trust that was established as part of the Angus Oil, Springfield Unit project. The agreement was to dedicate the City's one third portion of the trust to use on developing/improving park sites within a given radius of the Springfield Unit site. The only park site encompassed within that radius being McCallen Park where the Boys and Girls Club is located. respectfully request that the Council review and discuss the attached correspondence regarding this matter. DG:PD xc: Mayor & City Council Members Michael T. Uberuaga, City Administrator Ray Silver, Assistant City Administrator OFFICERS Richard Cook President • Robert Hoxsle t st Vice -President John Maruska Vice -President Mel Samick Vice -President Alex A. Accetta Treasurer Daniel "Skip" Marshall Secretary Chris Schneider Executive Director DIRECTORS Karen Broxson David Garofalo Clay James Janet Lacy Sarah Lazarus Ray Mendoza Jake Mutchler Michael Roberts Don Stanton Hank Todd Karl Van Holt ADVISORY MEMBERS Ed Arnold AI Chiantareno Mayor John Collins Coundlmember Laurann Cook • Paul Cook • Roberta DeFraga Dick Gregg Ed Holland Chief Ron E. Lowenberg • Don MacAllister Dennis G. McGahey Mayor Linda Moulton -Patterson • Wayne Osborne • Coundlmember James Petrikin, D.C. Craig Rice Kim Richards Marge Schneider • Coundlmember George B. Scott Coundlmember Jim Sifva • Hal Smith Burton Willis, M.D. J. David Winscott • Past President BRANCH DIRECTORS Richard Cummer, H.B. Lisabeth Grimm, F.V. May 22, 1995 Mayor and Honorable City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Zoe BOYS & GIRLS CLUBS OF HUNTINGTON VALLEY P.O. Box 2047 Huntington Beach Califomia 92647-2047 (714) 841-7804 FAX (714) 841-7972 Subject: Assignment of Royalties, Springfield Property Trust Dear Mayor and City Council, On March 16, 1995, we submitted the attached letter to you. However, we inadvertently omitted the enclosures that support the intent of the Springfield Property Trust that one-third of the balance of the Trust is to be distributed to the City of Huntington Beach for parks and recreation purposes within one mile of the Springfield Drill Site. Attached is the complete submittal including support documentation. Thank you for your patience. Sincerely, At�J v Paul E. Cook MEMBER Boys 8 Gins Clubs of America Chamber of Commerce, Fountain Valley Chamber of Commerce, Huntington Beach x�. c IV c� :. _. rn -j c7 ,r v T rTt O e _ .,� "The POSITIVE PLACE For KIDS" A United Way Agency WDERAL I.D.# 95-6V OFFICERS Richard Cook BOYS & GIRLS CLUBS President OF HUNTINGTON VALLEY • Robert Hoxsie ist Vice -President March 16, 1995 John Maruska P.O. Box 2047 Vice -President Huntington Beach Mel Samick Mayor and Honorable CityCouncil Cafifomia 92647-2047 Vice -President y Alex Pr sid et City of Huntington Beach (714)841-7804 Treasurer 2000 Main Street FAX (714) 841-7972 Daniel "Skip" Marshall Huntington Beach, CA 92648 Secretary Chris Schneider Executive Director Subject: Assignment of Royalties, Springfield Property Trust DIRECTORS Dear Mayor and City Council, Karen Broxson DavidGarofalo Clay Jamesames In 1986, the City Council approved Zone Change No..86-4 and Special Use Janet lacy Permit No. 86-7 allowing Angus Petroleum Corporation to establish the Sarah Lazarus Ray Mendoza Springfield Avenue Drill Site at Springfield Avenue and Delaware Street. Jake Mutchler At that time, Angus Petroleum Corporation established a $1 million trust Michael Roberts fund to compensate owners of property located within 100 feet of the drill Don Stanton Hank Todd site for claims of loss of property value during the drilling period. Karl Van Holt The features of the "Springfield Property Trust" included payment of the balance of the Trust after the drilling period on an equal 1/3 basis to: ADVISORY MEMBERS Ed Arnold At Chiantaretto (a) Owners of properties located within 100 feet of the drill site; Mayor John Collins Coundlmember (b) the City of Huntington Beach for parks and recreation purposes within Laurann cook one mile of the Springfield Drill Site; and Paul Cook • Roberta DeFraga Dick Gregg (c) Angus Petroleum Corporation. Ed Holland Chief Ron E. LowenbergDon lister • aG.IMcGahey At that time the onlyundeveloped ark site within one mile of the drill site Dennis was McCallen Park located sou h of Yorktown Avenue between Delaware Mayor and Huntington Streets. After considerable discussion by the City Council, Linda Moulton -Patterson • Wayne Osborne it was understood at (lie time ilia( McCallcn Park would be the beneficiary of • Coundlmember this 1/3 portion of the Springfield Trust. Enclosed is a Summary of' the Springfield James PeVikin, D.C. Craig Rice Property Trust. The proposed benefit for park development is described under Kim Richards Other Benefits. Marge Schneider • Coundlmember George B. Scott in the meantime, the City leased McCallcn Park to the Boys and Girls Clubs of Coundlmember Jim Silva Huntington Valley for a period of 50 years and we developed a new $1.5 million • Hal Smith youth facility to help with the education and recreation of boys and girls ages 6 to Burton Willis, M.D. 17. Accordingtlt the Boys d Girls Club iresponsible and o our ease a greemcn' y ans J. David Winscott • Past President liable for the entire park, including insurance, malntenancc and landscaping. I lowcvcr, the park is used by the entire neighborhood during Club hours as well as hours when the Club is closed. This park is truly a benefit to the community. BRANCH DIRECTORS Richard Cummer, H.B. Lisabeth Grimm, F.V. MEMBER Boys 8 Girls Clubs of America Chamber of Commerce, Fountain Valley Chamber of Commerce, Huntington Beach 011 "The POST -FIVE PLACE For KiDS" A UNIW Way Agency FEDERAL I.D.# 95-6192 Mayor and Honorable City Council March 16, 1995 Page 2. The new building replaced our leased Facility at Bushard School which was being; sold by the Fountain Valley School District. Cash and pledges of $850,000 were raised by a committee of community Ieadct;s who worked to make this dream a reality and a $650,000 loan was taken out to cotplete the building. On Scptenibcr 8, 1991 the new Club opened on the site of McCallen Park. The new Club offers daily programs in youth recrea(ion, after school care, computer/ tutoring services, teen aclivitics, drug prevention and sports, and must importanl, provides a place to go for our I luntington Beach youth. In addition, (he Club offers an important allernative for latchkey children. They now have a place to learn, (o play, and he with friends away from the streets. 'File City has received a letter dated March 16, 1994 from PG&E Resources Company, the parent company to Angus Petroleum Corporation, which transmitted an Assignment of Conveyance of Production Payments from the Springfield'1'mM. 'Phis Assignment effectively assigns one-half of an existing Production Payment of $750,000 to the City of I luntington Beach and one-half to Angus Petroleum Corporation. The letter states Ilia( this Production Payment is now payable. We are herein requesting (lie City Council to now honor tl►e intent of the 1996 Springfield Property Trust by assigning the $375,000 you will receive from the trust directly .ti) I luntington National Bank for the sole purpose of reducing the balance of approximately $582,000 clue on the loan which was used to complete the Boys and Girls Club facility. We would be pleased to nice[ with you and city staff members to. answer questions and discuss the proceedings of 1986. Most of the undersigned were directly involved in the negotiations and City Council considerations which led to the Springfield Properly 'Trust. . Sincerely, Richard Cook, V csidenl A u1iLCarmichaeI ngus Petroleum P;)-c vis, AnguAerly Sheldon us Petroleum Don tac:Allisicr, 198 'ily Councilman hn 1 humus, 19 6 City Councilman Paul Cook, 1986 Boys Club Board Member Honorable Mav_or and City Council Members of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 AZI Springfield Property Trust /� -�Wr,d. v Y(.—? • r. ' &XAA4171" C'o uH c., / Are 4., 1cIL ffe'srin one o.0 t,ndf iio„r appr.v4 l is er-61VITjhll t 4Yv i }- Dear Mayor and Members of the City Council: ANGUS Petroleum Corporation ("ANGUS") is preparred to establish a One Million Dollar trust for the benefit of owners of property located within one hundred 'feet of the Springfield Avenue Drill Site as shown on oage =our of the attached summary of the Springfield Property Trus= (the "Trust"). At your request we have prepared the enc:csed su-rnary and will deliver a copy of this letter to each affected homeowner. As set forth in the summary, the features '_f "e trust include: i. Pavmen_ by the Trust of up to OnMillion Dollars ($1,000,000.00) for claims of loss of Property value during the drilling pe: rod _ March I, _yam % to February 28, 1990, for croperties ._cated within one hundred fee: of the Springfield Drill S:_e. Pavnen�= y _�:e _'ru_t o thz to"L�nce _f _:�e vr:e Million Dollars after the drilling period on an equal 3ne third basis to: (a) Owners of properties located within one hundred feet of the Drill Site Honorable Mayor and City Council Members of the City of Huntington Beach Page 2 (b) The City of Huntington Beach for parks and recreation purposes within one mile of the Springfield Drill Site; and (c) Angus Petroleum Corporation. 3. Administration of and distribution from the Trust to be by an independent third -parry trustee to the maximum extent possible. 4. Payment by the Trust of all appraisal and other costs associated with the compensation program. As an example of our commitment to the City of Huntington Beach and our neighbors, ANGUS is prepared to establish the Trust as soon as the Springfield Oil Recovery Project is approved by the City of Huntington Beach. Upon approval we will immediately work with the City of Huntington Beach to prepare the necessary documentatior.'to create the - Trust. We look forward to working with you and our neighbors to establish and operate the Springfield Property Trust. Very truly.yours, John Carmichael Vice President Enclosure 0883B t SPRINGFIELD PROPERTY IhJST SUMMARY ANGUS PETROLEUM CORPORATION WILL ESTABLISH AN IRREVOCABLE TRUST' TO, PROVIDE VALUE PROTECTION FOR CERTAIN PROPERTIES ADJACENT TO THE PROJECT DRILLSITE, SEE MAP)..'. . ADJACENT OWNERS SELLING THEIR PROPERTIES DUFFING DRILLING ACTIVITIES. WHO EXPERIENCE A RELATIVE DECLINE IN .PROPERTY VALUE'WILL-BE COMPENSATED BY THE TRUST. ANGUS WILL ESTABLISH THE TRUST UPON CITY COUNCIL APPROVAL OF THE PROJECT, AND SHORTLY THEREAFTER WILL CONTRIBUTE TO THE TRUST: $270,0 C CASH. $%�O,000' DEDICATION OF S?�?:NGFIELD PROJECT REVS"HUES. r.NGjS Yd:__ APPO — A TR .`USTEE T- CPERAT=, ADMINISTER, AND CARRY CUT THE PURPOSES OF THE TRUST. THREE YEARS AFTER' THE START OF DRILLING ACTIVITIES, THE TRUST WILL TERM',NATE AND ITS REMAINING ASSETS DISTRIBUTED: — ONE THIRD TO ADJACENT PROP=RTY OWNERS. — ONE THIRD TO PARKS $ RECREATION (EG. MCCALLEN PARK). — ONE THIRD TO ANGUS, IN ADDITION TO THE TAX REVENUES, STREET IMPROVEMENTS, AND OTHER BENEFITS THE PROJECT CONTRIBUTES TO THE SURROUNDING NEIGHBORHOOD AND TO THE CITY, THE TRUST WILL ALSO PROVIDE: VALUE PROTECTION TO OWNERS NEEDING TO SELL. — PARTICIPATION TO OWNERS NOT NEEDING TO SELL. — RECREATIONAL BENEFITS TO ALL NEIGHBORHOOD RESIDENTS. SPRINGFIELD PItOPBRTY TRUST : SUMMARY This is a summary.of the key provisions of the Springfield Property 'gust., 'It his';:: been prepared to help persons owning property within the trust area to understand the benefits provided by the Trust and how those benefits work. ' DACIMOUND During the time the Springfield Oil Recovery project was under consideration,:' members of the Huntington Beach City .Council generally agreed with lnformat o' n provided by local realtors and other real estate experts that completion of the proposed project would generally enhance property values in the nelghborh*ood. Several members of the Council continued to Ge concerned that if owners directly across from the drillsite had to sell their property during the drilling phase they might not be able to get a full and fair price. Primarily to address that concern, and secondarily to provide a sharing in the benefits of the project, the concept of the Springfield Property Trust was developed. _• The Huntington Beach City Council placed the formation of this Trust as Gonditi' n No. $6 of the'Use Permit for the Springfield project. The Trust has now been formed by ANGUS Petroleum Corporation in accordance with the Condition. The primary beneficiaries of the Trust are the current owners of the thirty two "protected properties" within 100 feet of the project drillsite. Other beneficiaries include the City of Huntington Beach and certain future owners of protected property. LOSS 13ENEFTT The loss benefit is a cash payment to owners who incur a "loss" in selling their' protected property during the drilling phase of the Springfield project. The loss amount is based on the difference between the actual selling pride of their property versus an estimate of what that price would have been without any nearby drilling operations. The estimate is initially set by professional appraisal of each protected property. This "initial value" is determined before drilling starts so that It represents a price unaffected by drilling. Periodically thereafter, it is adjusted by an Orange County real estate index so that it also reflects current market conditions. A selling price less than the price estimate, with few exceptions, will trigger a loss benefit under the Trust. This not only covers property that declines in price, it also covers property that does not go up in price as fast as the rest of the market. This is an important feature that provides meaningful price protections, even in a rising real estate market. Dis5ritIBUT10N BENI FIT When the drilling phase of the Springfield project comes to an end, the loss benefit stops and the distribution benefit starts. The distribution benefit is a cash payment ; to certain owners of "beneficial property" -- protected property on which no loss benefit was previously paid. 'In the aggregate, the distribution amount to the owners is determined as one third of the theft -remaining assets of the Trust. This aggregate amount is then split up evenly among the beneficial properties and paid to their owners of record as of the last day of the drilling phase. Based on remaining assets of 11 million, 32 properties would share In $1/3 million --� over $10,000 each. Of course, if there are any loss payments, remaining assets would obviously be less than $i million. Not obvious, however, Is that less remaining assets does not necessarily reduce the $10,000 distribution amount. For- example, if two pproperties were sold at a loss of $20,000 each, remaining assets would be reduced to $9601000. In this case, the other 30 properties would then share in $320,000 , a distribution amount still more than $10,000. In fact, so long as each loss on average Is less than $30,000, the distribution amount should be at least $10,000. OTHER i3ENEFITS When distribution benefits are paid to owners of beneficial property, a similar distribution will be made to the City of Huntington Beach, The distribution will be eartnarked for park development near the project site, and ..should provide recre0onol benefits to a larger number of area residents. This amount is also based on one third of the remaining assets of the Trust. Although the minimum amount is less certain than that to owners of beneficial property, fill Indications support an amount of at least $250,000. This should be more. than - adequate to make substantial park Improvements. ADMINISTRATION Trust Services of America, ine., a subsidiary of Ca1Fed, Inc. has been retained as the Trustee of the Springfield Property Trust. As Trustee, TSA will be responsible for holding Trust assets and making disbursements from the Trust for - losses, distributions and other expenses of the Trust. As Trustor, ANGUS will retain certain responsibilities In directing the administration of the Trust. LIMITATIONS The loss benefit of the Trust is applicable only during the period when drilling Is underway. The distribution benefit of the Trust is applicable only when drilling has been completed. Trust payments for losses, distributions, and all other expenses will not exceed $1 million In total. This summary is subject to all other terms and conditions contained in the Springfield Property Trust document. -2- &. Resources Compar�'y' Match 16, 1994 City of Huntington Beach, California _... 2000 Main Street 14unt1ngton Beach, California -�--» Attn: Michael T. Uboruaga City Administrator RE: Assignment of Conveyance of Production Payment Royalty Interests Springfield Unit/Block 1804 Vista Del Mar Tract .. Section 5 City of Huntington Beach Orange County, California Gentlemen: Attached for. execution by the City are 3 copies of the captioned Assignment. This Assignment effectively assigns an existing Production Payment 1/2 to the City of Huntington Beach and 1/2 to Angus Petroleum Corporation. Please execute all 3 copies and return 2. This Production Payment was established, pursuant to Special Use ; Permit 86-7, as part of a Trust Account to compensate "across the, street" neighbors for losses which were incurred during the drilling phase of the Springfield Unit project. The neighbors were paid and the Trust terminated. The Trustee has executed the attached Assignment. This Production . Payment of $750,000 payable out of the production from the Springfield Unit is now payable 1/2 to the City and 1/2 to Angus. For reference purposed, a copy of the Trust Agreement of 1/8/88 is also attached. If you have any questions, please call me at (214) 750-3864. GWA:sr cc: Very t ly urs, he. \i�G Anderson Onshore Land Manager John Carmichael/Huntington Beach Office i vi'rk RN/Orhrhrt r76,nne"v OFFICERS Richard Cook President • Robert Hoxsie 1st Vice -President John Maruska Vice -President Mel Samick Vice -President Alex A. Accetta Treasurer Daniel "Skip" Marshall Secretary Chris Schneider Executive Director DIRECTORS Karen Broxson David Garofalo Clay James Janet Lacy Sarah Lazarus Ray Mendoza Jake Mutchler Michael Roberts Don Stanton Hank Todd Karl Van Holt ADVISORY MEMBERS Ed Arnold Al Chiantaretto Mayor John Collins Councilmember Laurann Cook • Paul Cook • Roberta DeFraga Dick Gregg Ed Holland Chief Ron E. Lowenberg • Don MacAllister Dennis G. McGahey Mayor Linda Moulton -Patterson • Wayne Osborne • Councilmember James Petrikin, D.C. Craig Rice Kim Richards Marge Schneider • Councilmember George B. Scott Councilmember Jim Silva • Hal Smith Burton Willis, M.D. J. David Winscott • Past President BRANCH DIRECTORS Richard Cummer, H.B. Lisabeth Grimm, F.V. i �E,_CEI.gt.Q t:i;Y �S.Cfif Pl `ITY 0r No, 5 March 16� 5 35 Mayor and Honorable City Council City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Subject: Assignment of Royalties, Springfield Property Trust Dear Mayor and City Council, BOYS & GIRLS CLUBS OF HUNTINGTON VALLEY P.O. Box 2047 Huntington Beach California 92647-2047 (714)841-7804 FAX (714) 841-7972 In 1986, the City Council approved Zone Change No. 86-4 and Special Use Permit No. 86-7 allowing Angus Petroleum Corporation to establish the Springfield Avenue Drill Site at Springfield Avenue and Delaware Street. At that time, Angus Petroleum Corporation established a $1. million trust fund to compensate owners of property located within 1.00 feet of the drill site for claims of loss of property value during the drilling period. The features of the "Springfield Property Trust" included payment of the balance of the Trust after the drilling period on an equal 1/3 basis to: (a) Owners of properties located within 1.00 feet of the drill site; (b) the City of Huntington Beach for parks and recreation purposes within one mile of the Springfield Drill Site; and (c) Angus Petroleum Corporation. At that time, the only undeveloped park site within one mile of the drill site was McCallen Park located south of Yorktown Avenue between Delaware and Huntington Streets. After considerable discussion by the City Council, it was understood at the time that McCallen Park would be the beneficiary of this 1/3 portion of the Springfield Trust. Enclosed is a Summary of the Springfield Property Trust. The proposed benefit for park development is described under Other Benefits. In*the meantime, the City leased McCallen Park to the Boys and Girls Clubs of Huntington Valley for a period of 50 years and we developed a new $1.5 million youth facility to help with the education and recreation of boys and girls ages 6 to 17. According to our lease agreement, the Boys and Girls Club is responsible and liable for the entire park, including insurance, maintenance and landscaping. w However, the park is used by the entire neighborhood during Club hours as wens hours when the Club is closed. This park is truly a benel'it to the community. MEMBER Boys & Girls Clubs of America Chamber of Commerce, Fountain Valley Chamber of Commerce, Huntington Beach x c Z .,� "The POSITIVE PLACE For KIDS" A United Way Agency FEDERAL I.D.# 95-6192466 i Mayor and Honorable City Council March 16, 1995 Page 2 The new building replaced our leased facility at Bushard School which was being sold by the houn(ain Valley School District. Cash and pledges of $850,000 were raised by a committee of community leaders who worked to make (his dream a reality and a $650,000 loan was taken out to complete the building. On Seplcmlwr 8, 1991 the new Club opened on the site of McCallen Park. The new Club offers daily programs in youth recreation, after school care, computer/ tutoring services, teen activities, drug prevention and sports, and most important, provides a place to go for our I lunlington Beach youth. In addition, the Club offers an important alternative for latchkey children. They now have a place (o learn, to play, and he with friends away from the streets. The City ltas received a letter dated March 16, 1994 from PG&E Resources Company, the parent company to Angus Petroleum Corporation, which transmitted an Assignment of Conveyance of Production Payments from the Springfield Trust. This Assignment effectively assigns one-half of an existing Produc(ion Payment of $750,000 to the City of I-lun(iuglon Beach and one-half to Angus Petroleum Corporation. The le(tcr states that this Production Payment is now payable. We �11-c herein requc.-Aing (lie City Council to now honor the intent of the 1986 Springfield Property Trust by assigning the $375,000 you will receive from the trust directly 16 I-lunting(on National Ban1c. for the sole; purpose of reducing the balance of approximately $582,000 due on the loan which was used to complete the Boys and Girls Club facility. We would he pleased to meet with you and city staff members to answer yues(ions and discuss the proceedings of 1986. Most of the undersigned were directly involved in the negotia(ions and City Council considerations which led to the Springfield Property Trust. Sincerely, /Riuliard Cook"13 csidenl ,j ohiCarmichae7is Petroleum I Pa vis, Angus P C- •e Sheldon ly Angus Petroleum Don acAllisler, t98 Wily Councilman hn Thomas, 19 6 City Councilman Paul Cook, 1986 Boys Club Board Member VED By CITY COUN GUEST FOR COUNCIL ACTION l I 19_i „�.,s, AAA 4,,,� A,,.. December `19, 1994 Submitted to: Honorable Mayor & City Council Members Submitted by: Michael T. Uberuaga, City Administ o / Prepared by: Patricia A. Dapkus, Management Assistant Subject: Assignment of Conveyance of Production Payment - Angus Petroleum - Springfield Unit Consistent with Council Policy? [ ] Yes [ ] New Policy Statement of Issue, Recommendation, Analysis, Funding Source, Alternate Actions, & Attachments STATEMENT OF ISSUE: Is the payment share and schedule for the production payment from Springfield Unit/Block 1804 of the Vista Del Mar Tract, Section 5 acceptable? RECOMMENDATION: 1. Approve the attached Assignment of Conveyance of Production Payment Royalty Interests agreement between the Angus Petroleum and the City of Huntington Beach and relating to royalties from Springfield Unit/Block 1804 of the Vista Del Mar Tract, Section 5. 2. Authorize the City Administrator to sign and execute the Assignment of Conveyance of Production Payment Royalty Interests agreement. ANALYSIS: In May of 1989 the City was assigned royalty interest on the Springfield Unit/ Block 1804 of the Vista Del Mar Tract, Section 5. Attached for execution by the City is the captioned Assignment. The Assignment effectively assigns an existing production payment of $750,000, half to the City of Huntington Beach and half to Angus Petroleum. FUNDING SOURCE: None ALTERNATE ACTIONS: Direct staff to provide further information. ATTACHMENTS: 1. Letter from PG&E dated March 16, 1994 explaining the nature of the agreement. 2. Agreements I� CITY OF H`JNTINGTON BEACH 2000 MAIN STREET OFFICE OF THE CITY CLERK CONNIE BROCKWAY CRY CLERK January 11, 1995 P G & E Resources Company 6688 N. Central Expressway, Suite 1000 Dallas, Texas 75206-3922 Attention: Gene W. Anderson, Onshore Land Manager CALIFORNIA 92648 The City Council of the City of Huntington Beach at their regular meeting held December 19, 1995 approved the Assignment of Conveyance of Production Payment Royalty Interests relative to Angus Petroleum. Enclosed is an original executed document for your records. For your information, Pat Davis, representing Angus Petroleum, picked u.p an original executed copy of the document for their records. If you have any questions regarding this matter please call the Office of the City Clerk at (714) 536-5227. Connie Brockway City Clerk Evelyn Schubert Deputy City Clerk Enclosure cc: Pat Dapkus, Management Assistant (Telephone: 714536-5227 ) 89-5T9216 I F=1; DING REQUESTED BY - RECORDED IN OFFICIAL RECORDS OF ORANGE COUNTY. CALIFORNIA ANGUS PETROLEt]M CORPORATION -1142 AM OCT 27'89 5772 BOISA AVENUE, SUITE 210 HUNTINGTON BEACH, CA 92649 [$27.00� � •��RECORDER ASSIGNMENT OF CONVEYANCE OF PRODUCTION PAYMENT ROYALTY INTERESTS - THIS ASSIGNMENT is made this 25th day of October , 1989, by and between ANGUS PETROLEUM ©�, CORPORATION, a Delaware corporation (herein referred to as "ANGUS"), TRUST SERVICES OF AMERICA, INC., TRUSTEE FOR THE SPRINGFIELD PROPERTY TRUST, (herein referred to as "TSA") and FIRST AMERICAN TRUST COMPANY, a California corporation (herein referred .to as "FIRST AMERICAN"), with reference to the following documents: A. That certain Conveyance of Production Payment Royalty Interest dated May 10, 1989 (effective as to runs of oil.and deliveries of gas and for all other purposes July 1., 1989 at 1:00 o'clock a.m.'Pacific Daylight time), by and between ANGUS, as,,, - Grantor, and "TSA", as Grantee, wherein Grantor bargained, -sold,' transferred, assigned and conveyed to Grantee a production payment royalt:.y interest equal to 100 percent ("the Royalty Interest") yf that. portion of 'Che oil and gas produced from (or to the extent unitized by the Springfield Unit or otherwise attributable to Block 1804 of the Vista Del Mar Tract, Section 5, City of Huntington Beach, Orange County, California ("Subject Lands"). A copy of said Conveyance is attached hereto marked Exhibit "A" and -by reference made a part hereof. Said Conveyance was °recorded on May 22, 1989, Official Records of. Orange County, California, as Document No. 89-270064. B. That certain unrecorded Services Agreement dated January 8, 1988 by and between ANGUS, as Trustor, and TSA, as Trustee of Trust No. 61-5164-00-1, copy of which is attached hereto marked Exhibit "B" and by reference made a part hereof. C. That certain unrecorded Agreement for Substitution and Appointment and Acceptance of Successor Trustee dated July ll,. 1989 by and between TSA, ANGUS, and FIRST AMERICAN, copy of which is attached hereto marked Exhibit "C" and by reference made a part hereof. D. It is the intent of this Assignment of Conveyance of Production Payment Royalty Interest that TSA assign, transfer and set over unto FIRST AMERICAN all of TSA's right, title and I HEREBY DE LAKE THE DOCUMENTARY TRANSFER TAX IS S, THE TAX ISc p GoiV.SiPeW)51J'/O1V .............. COMPUTED ON FULL VALUE OF PROPERTY CONVEYED; OR, ..................... COMPUTED ON FULL VALUE. LESS LIENS AND ENCU RA EMAINING;07 T TIME ^EClARA OR ArENT_7RMAr , 89=519276' interest in and to a production payment royalty interest equal to 100 percent.of that portion of the oil and gas produced from (or to the extent unitized by) The Springfield Unit or otherwise attributable to Block 1804 of the Visa Del Mar Tract, Section 5, in the City of Huntington Beach, Orange County, California; subject, however, to the terms and. conditions as set forth in said Conveyance of Production Payment Royalty Interest. NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is agreed as follows: 1. TSA hereby bargains, sells, transfers, assigns and conveys unto FIRST AMERICAN, its successors and assigns, all rights of TSA acquired pursuant to said Conveyance of Production Payment Royalty Interest referred in Recital A, together with any and all other rights acquired by TSA pursuant to said Conveyance, subject to the terms, conditions and restrictions as set forth in said Conveyance, it being intended that TSA relinquishes all interests whether referred to in this Assignment or not acquir-ed pursuant to said Conveyance, including any rights acquired under that certain Services Agreement referred to in Recital B. 2. In addition to the Production Payment Royalty Interest covered in this Assignment, TSA concurrently herewith transfers and sets over unto FIRST LMERICAN any proceeds of production attributable to said Royalty Interest referred to in said Conveyance or any other accumulated interests whether described herein or not held by TSA as Trustee or.Agent. 3. TSA further bargains, sells, transfers and assigns unto FIRST AMERICAN any rights or interests of TSA provided for under that certain Agreement for Substitution referred to in Recital C above. IN WITNESS WHEREOF, the parties hereto have executed this Assignment the day and year first above written. ANGUS PETROLEUM CORPORATION, a Delaware corporation M OF IA Vice President "ANGUS" 2. TRUST SERVICES TRUSTEE FOR THE PROPERTY TRUST 89-5T9276 OF AMERICA, INC., SPRINGFIELD By war or. . Vice Presi ent Br osep Di Tomasso, Asst. Secretary' - "TSA" FIRST AMERICAN TRUST COMPANY, a California corporation By ✓8 C,& dw✓ By 4��l -V i u rr t,.r-i' "FIRST AMERICAN`�z STATE OF -CALIFORNIA ss. COUNTY OF I,es ) On (aC 60& 1989, before me, the undersigned, a Notary Public in and for said State, personally appeared - 6.4d S. SS*.j0.,L , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as Se_VjCr. President, and T6Sejjk t); , personally known to me (or proved to me on the b sis of satisfactory evidence) to be t e person who executed the within instrument as Secretary and acknowledged to me that the corporation executed such instrument. Witness my hand this ,_ day of OC bbev 1989. OFFICIAL SEAL NANCY B. HART NOTARY PUBLIC • CALIFORNIA LOS ANGELES COUNTY My Comm. Expires March 8, 1991 '!� 6 44A.. I- otary PuFfic 3. 89-5T9276 STATE OF CALIFORNIA ) ss. COUNTY OF (9rdAdi 0- ) 'On (�� v-2�%9�, 1989, before me, the undersigned, a Notary Publi n and for said State, personally appeared `Jf c _ UI/1S , personally known to me (or proved to me on-thdi basis of satisfactory P-k— dence) to be the person who ex uted the within instrument as President, and :J-ane - //ya/m , personally known to me (or proved to me on the.basis of satisfactory evide ce) to be the e rs n who executed the within instrument as ,`� pry-S1 and acknowledged to me that the corporation executed such instrument. Witness my hand this aO+k day of De-rIn1oer , 1989. STATE OF CALIFORNIA ss. COUNTY OF ORANGE nvuaL v rum.1.1k; • OFFir SEAL LIELA Notary Callfomle: ORANGE COUNTY My Commie W Expree JXL 3..tMZ On October 25 , 1989, before me, the undersigned, a Notary Public in and for said State, personally. appeared JOHN D. CARMICHAEL , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as VICE President, and --- , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as --- Secretary, and acknowledged to me that the corporation executed such instrument. Witness my hand this 25th day of October , 1989. OFFICIAL SEAL 4rtart' Public SHIRLEY CLINTON s Notar/ Pubic - Colifomia a PRINCIPAL OFFICE IN ORANGE COUNTY MY COMMISSION EXPIRES OCTOBER, 28, 1989 4. EXHIBIT "B" SERVICES AGREEMENT "11-5192T6 This Agreement is made on the day last executed below by and between ANGUS Petroleum Corporation, a Delaware Corporation ("Trustor") and Trust Services of America, Inc., a California Corporation ("Agent") for the following reasons: (A) Trustor desires to purchase certain services from Agent, and (B) Agent desires to provide those services for compensation. Based on the foregoing reasons, and other good and valuable considerations the receipt and sufficiency of which is hereby acknowledged, Trustor and Agent agree as follows: Article I: Services to be provided by Agent 1.1 Agent will perform all of the duties imposed upon Trustee under the Trust Agreement including the filing of tax information reports, as required by law. 1.2 Agent will 89tain all supplies, postage, telephone, stationary and other items that Agent deems necessary for the performance of its duties hereunder. Article II: Compensation'to be paid to Agent 2.1 The Trust (or if the balance of' cash held by the Trust is insufficient, Trustor) will pay Agent for its services pursuant to 1.1, as follows: a.) by June 30, 1987, an acceptance fee of $6000, which will be credited to the annual administration fee in (c) below, b.) from the date hereof to the Commencement Date, a monthly administration fee of $300 per month, payable by the 15th day of each such month, c.) from the Commencement Date to the date the Trust is terminated, an annual administration fee of $10,000 per year (or pro-rata portion thereof for a partial year), payable by January 15th of each such year, and d.) on the date the Trust is terminated, a termination fee of $2,500, payable on the day the Trust is terminated. 2.2 The Trust (or if the balance of cash held by the Trust is insufficient, Trustor) will pay and/or reimburse Agent for all expenses it incurs pursuant to 1.2, within 10 days of receipt -,of Agent's invoice for such expenses. EXHIBIT "B" 89-579216 2.3 The Trust (or if the balance of cash held by the Trust is insufficient, Trustor) will pay Agent additional_ fees for any additional services it might provide, including but not limited to the filing -of income tax returns for the Trust, as Agent and Trustor may hereafter mutually agree. Article III: Conditions of Agent's Duties 3.1 Trustor agrees that Agent shall be entitled to rely upon the genuineness and validity of signatures of Trustor, and to rely and act or refrain from acting on the basis of any notice, instrument, instruction or other document believed by Agent to be signed by Trustor. 3.2 Trustor agrees that Agent shall have the right to resign hereunder effective 30 days after receipt by Trustor of written notice thereof, and Agent agrees that Trustor shall have the right to remove Agent hereunder effective 30 days after receipt by Agent of written -notice thereof. In either case, Agent shall deliver cash balances net of any fees due, royalty interests, and files of the Trust to such successor Agent as Trustor designates by written notice to Agent. 3.3 Trustor agrees to indemnify Agent for, and to hold it harmless against any loss, liability or expense incurred (including the resonable costs and expenses of defending itself against any such claims thereof), arising out of or in connection with the performance by Agent of its duties hereunder excepting only Agent's negligence, fraud, bad faith or breach. Article IV: Miscellaneous Provisions 4.1 The term of this Agreement shall be from the day last executed below to the day the Trust is terminated, unless earlier terminated by resignation or removal pursuant to 3.2. 4.2 All capitalized terms not defined herein shall have the same - meaning as those shown in Article X of the Springfield Property Trust Agreement of even date herewith (herein the "Trust Agreement"). 4.3 The provisions contained in Article XI of the Trust Agreement are incorporated herein by reference as though set forth in full by changing "Trustee" to "Agent", changing "Trust" to "this Agreement", and by otherwise changing as the context dictates mutatis mutandis. EXHIBIT "B" 89-579276 TRUSTOR ANGUS PETROLEUM CORPORATION By: (i(/ Willi m ,I. en���iceP Treas rerti d esident AGENT TRUST SERVICES OF AMERICA, INC. By: Howard J. Is or Senior Vice President r dim .Cox F/-i�st• (ServicAgmt)/S6 1/8/n Date 1 � 4O Date / 4 Date 11 on EXHIBIT "C" 89-579Z%6 AGREEMENT FOR SUBSTITUTION �l11 J AND APPOINTMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE This Agreement is entered in to this llth day of July 1989 by and among the following: (1) TRUST SERVICES OF AMERICA, a California corporation, hereinafter referred to as "TSA", as Trustee of Trust Number 61-5164-00-1 (2) ANGUS PETROLEUM CORPORATION; a Delaware corporation, hereinafter referred to as "ANGUS" and (3) FIRST AMERICAN TRUST COMPANY, a California corporation, hereinafter referred to as "First American", RECITALS WHEREAS, TSA is the current Trustee under the Springfield Property Subdivision Trust Agreement, under TSA's Trust Number 61-5164-00-1 hereinafter referred to as the "Trust Agreement", executed as of the 8th day of January 1988, and WHEREAS, TSA and ANGUS have entered into a Services Agreement, 'dated January 8, 1988, hereinafter referred to as the "Services Agreement"; and WHEREAS, TSA agreed to perform certain services required of the --Trustee under the Trust Agreement and Services Agreement; and WHEREAS, TSA desires to resign as Trustee and terminate its responsibilities under the Service Agreement; and WHEREAS, ANGUS wishes to appoint First American as Successor Trustee and wishes to release TSA from the continuing duties and obligations set forth in the Trust Agreement, and the Services Agreement, provided First American accepts appointment as Successor Trustee and enters into a new Servicing Agreement with ANGUS concurrently therewith and provided that TSA shall not assess nor be entitled to any termination fee under either the Trust Agreement or the Services Agreement; and WHEREAS, First 'American agrees .to accept its appointment as Successor Trustee and agrees to act as Agent under a new agreement substantially in the form of the Servicing Agreement and which is attached hereto as Exhibit "A"; and NOW THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1 - 89-579276 �. EXHIBIT "C" 1. TSA and ANGUS do. hereby agree to waive any written notice of ANGUS' election to appoint a Successor Trustee and hereby amend the Trust Agreement to the extent necessary to allow First American to succeed to trusteeship in the place and stead of TSA. 2. TSA shall not change or assess any termination fee to ANGUS under the Trust Agreement or the Services Agreement. TSA shall be entitled only to the appropriate monthly administration fee plus its appropriate prorated portion of the annual administration fee as these are set forth in the Services Agreement. 3. ANGUS does hereby appoint First American as Successor Trustee to perform the duties and obligations of Trustee under terms and conditions of the Trust Agreement. 4. First American does hereby accept its appointment as Successor Trustee and agrees to assume and be bound by all the obligations and duties set forth in the Trust Agreement. 5. TSA does hereby assign all of its rights, duties, and powers under the Trust Agreement, and assigns all its right, title and interest in and to'the Trust Property and the- Trust Agreement to the Successor Trustee, as appointed herein. TSA further agrees to execute and deliver to Successor Trustee any and all documents reasonably necessary to transfer to First American all of TSA's right, title or interest in or to the Trust Property. 6. ANGUS does hereby release TSA from any and all obligations and duties under the Trust Agreement and as to the trust estate. ANGUS acknowledges that all such obligations and duties shall be performed by, and are the responsibility of, First American. 7. TSA does hereby agree to indemnify and hold harmless First American as Successor Trustee, against suit, actions, claim, demand, lien, loss, damage, fine, judgement or decree, or any expenses in connection with the foregoing, including reasonable attorneys' fees, arising from TSA's acts or omissions while acting as Trustee during the period from the inception of the Trust to the date of execution of this Agreement. . S. First American, as Successor Trustee, does hereby indemnify and hold harmless TSA against suit, action, demand, lien, loss, damage, fine, judgment or decree, or any expenses in connection with same including reasonable attorneys' fees, arising from acts or omissions of First American while performing the duties and obligations of Trustee under the Trust Agreements. 9. In the event of any legal action or proceeding to enforce or declare the effect of any provision of this Agreement, the prevailing party in such action or proceeding shall be 2 89-579276 EXHIBIT "C" entitled to recover from the other party all costs and attorneys' fees incurred therein by the prevailing party. 10. ANGUS, its successors and assigns, does hereby agree to indemnify and hold harmless First American from and against all liabilities, fees (including reasonable attorneys' fees), damages, costs, and expenses that First American may incur, directly or indirectly, as a result of the performance of its duties as Trustee, under the terms of the Trust. This indemnity shall not be limited or terminated by the appointment of a Successor Trustee or termination of the Trust. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. TRUST SERVICES OF AMERICA, a California corporation ("TSA") By: Its: _feAl/DQ !//rG� B .�,/ts:�� 1- �. / f ANGUS PETROLEUM CORPORATION, a Delaware corporation ("ANGUS") By: azalflwl�� Its: Vice President By. Its: FIRST AMERICAN TRUST COMPANY, a California corporation ("Fir t Ameri an") B y` • By: Its: THE FOREGOING IS CONSENTED TO AND APPROVED: CITY U NGT CH By: By 7- G -� 3 ' \ !Pikk Y t , i ? SPRINGFIELD PROPERTY TRUST AGREEMENT This Agreement is made on the day last executed below by and between ANGUS Petroleum Corporation, a Delaware Corporation ("Trustor") and Trust Services of America, Inc., a California Corporation ("Trustee") for the benefit of Owners, City and Trustor, for the following reasons: (A) Trustor desires to conduct certain oil development and oil recovery operations on the Drill Site; (B) City has approved Use Permit 86-7 authorizing said operations on the condition, among others, that Trustor establish this Trust; (C) Trustor desires to meet said condition to effectuate Use Permit 86-7; and (D) Trustee. desires to administer this Trust in accordance with the terms hereof and in accordance with the Services Agreement of even date herewith for compensation as provided therein. Based on the foregoing reasons and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Trustor and Trustee agree as follows: Article I: Purposes of Trust 1.1 During the Covered Period, the purpose of this Trust is to provide compensation to Owners of Protected Property incurring a Loss. 1.2 After the Covered Period, the purpose of this Trust is to provide a sharing in the benefits of operations on the Drill Site L1 by providing Distributions to Owners of Beneficial Property, City and Trustor. Article II: Duties of Trustor 2.1 Trustor will establish the corpus of the Trust, which shall be One Million Dollars ($1,000,000.00) in total assets, by depositing with Trustee, no later than 90 days after the start of the Covered Period, the following: a. cash, in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00), and b. royalty interests in the Springfield Unit, in the form of a production payment in the principal amount of Seven Hundred Fifty Thousand Dollars ($750,000.00). 2.2 Trustor will provide to Trustee any and all information requested from time to time by Trustee, that Trustee in its sole and absolute discretion deems necessary or convenient in carrying out its duties hereunder, including: a. the name and address of Owners of Protected Property b. the name and address of Owners of Beneficial Property, and c. the name and address of eligible Appraisers and Trust's Appraiser. 2.3 Trustor will give (or accept) all notices to (or from) Trustee and accept all documents from Trustee, as provided herein. - 2 - ON Article III: Duties of Trustee 3.1 Trustee will accept deposits of cash and royalty interests to the Trust, will at all times invest the cash portion of assets held by the Trust in Trustee's short term common trust fund or other fund approved by Trustor, and will within 30 days of the end of each calendar quarter, submit a report to the Trustor on the balance of assets held by the Trust, the income received, the expenses paid, and the Losses paid, during such quarter. 3.2 Except as provided in Article IX, Trustee will pay out of the Trust all expenses of the Trust, as approved and directed by Trustor, as follows: a. all reasonable and customary fees charged by Appraisers in Articles IV and VI, b. all fees charged by Trustee in connection with the Trust pursuant to the Services Agreement of even date herewith, c. debt service charged by Trustor in connection with loans made pursuant to 9.2 (b), and d. any other necessary and reasonable expenses of the Trust. 3.3 Except as provided in Article IX, Trustee will pay out of the Trust all Losses and Distributions, as follows: a. for Losses, within 10 days of receipt by Trustee of Trustor's notice of Loss pursuant to 6.6, and b. for Distributions, within 30 days of receipt by Trustee of Trustor's notice of Distribution pursuant to 8.2. - 3 - 3.4 Trustee will keep and maintain an orderly file of all notices, appraisals, documents, payments, expenses, correspondence and any and all other records involving the Trust, the Owners, or the Protected Property, which files will be made available to the Trustor for inspection during Trustee's normal business hours. 3.5 Trustee will give (or accept) all notices to (or from) Trustor, Owners and Appraisers; accept all documents from Owners and Appraisers; and deliver all documents to Trustor, as provided herein. Article IV: Determination of Initial Value 4.1 Within ten days of the Commencement Date, Trustee will mail the Valuation Notice (in the form shown in Exhibit B hereto) by registered mail to each Owner of Protected Property at the address provided by Trustor. 4.2 For each Protected Property, if Trustee has received a Valuation Notice signed by its Owner within 45 days of the Commencement Date, Trustee will give written notice to Trust's Appraiser (and, if one has been designated on the Valuation Notice, to Owner's Appraiser) to determine the Appraisal of such Protected Property. 4.3 The Initial Value of each such Protected Property will then be determined as follows: a. if Trustee has not received a Valuation Notice signed by Owner within 45 days of the Commencement Date or if Trust's Appraiser has not been allowed entry to the Protected Property within 120 days of the Commencement Date, the Initial Value will be deemed to be zero. b. if Owner has not designated Owner's Appraiser on the - 4 - 12 Valuation Notice, or if Trustee has not received an Appraisal from Owner's Appraiser within 120 days of the Commencement Date, the Initial Value will be the Appraisal as determined by Trust's Appraiser. c. if the Appraisals Owner's Appraiser higher Appraisal i lower Appraisal), 1 of such Appraisals. determined by Trust's Appraiser and differ by 3% or less (i.e. if the less than or equal to 103% of the ,he Initial Value will be the average d. if the Appraisals determined by Trust's Appraiser and Owner's Appraiser differ by more than 3%, Trustee will give notice to each Appraiser of the difference and request that within 30 days they mutually agree on a single Appraisal or failing that, that they mutually agree on a third Appraiser, and i)if the Appraisers agree on a single Appraisal, the Initial Value will be that Appraisal, or ii) if the Appraisers agree on a third Appraiser, the Initial Value will be the Appraisal as determined by that third Appraiser, or iii) if the Appraisers cannot agree on a single Appraisal or a third Appraiser, the Initial Value will be as determined by a court of competent jurisdiction. 4.4 No later than 180 days after the Commencement Date, Trustee will provide notice of the Initial Value determined herein to those Owners from whom a Valuation Notice has been received pursuant to 4.2'. - 5 - W Article V: Determination of Loss 5.1 The Loss with respect to each Sale Transaction involving a Protected Property will be determined in accordance with the equation: LOSS = (A x B) - C, wherein A.... is the Initial Value of said Protected Property multiplied by the then -current Market Index, less the Sales Price in said Sale Transaction, B....is one (1.000) less the Commission in said Sale Transaction, and C.... is the aggregate amount of. Losses paid by the Trust to prior Owners of said Protected Property. 5.2 For purposes of determining Loss, Trustor reserves the right to adjust, the Sales Price if Trustor determines that the Sales Price: a. reflects physical damage to or neglect of the Protected Property not reflected in the Initial Value, b. does not reflect the then -current Fair Market Value of the Protected Property, or c. does not reflect consideration other than cash paid in the Sale Transaction. 5.3 An example of determining Loss is shown in Exhibit C. Article VI: Procedure For Payment of Loss 6.1 In the event Owner enters an agreement with respect to a Ms� Sale Transaction that could or might result in a Loss, and Owner intends to receive compensation from the Trust for such Loss, then Owner must notify Trustee at least 30 days prior to the completion of such Sale Transaction by delivering to the Trustee all of the following documents: a. the completed Claim Notice (in the form shown in Exhibit D hereto), executed by all of the Owners of the Protected Property and executed by Owners' real estate agent in said Sale Transaction, if any; b. a true, full and complete copy of the agreement with respect to said Sale Transaction, and c. a true, full and complete copy of the listing contract with Owners' real estate agent, if any, with respect to said Sale Transaction. 6.2 Trustee shall be entitled to rely upon the genuineness and validity of all documents •received by it pursuant to 6.1, and rn further reliance on the records of the Trust, Trustee will perform the calculation described in paragraph 5.1 within 10 days of receipt of such documents. If the calculation results in an amount that exceeds $1000, Trustee will give written notice to Trust's Appraiser to determine a current Appraisal of the Protected Property. 6.3 Within 30 days of receipt of documents pursuant to 6.1, Trustee will give to Owner a Provisional Loss Notice (in the form shown in Exhibit E hereto) and, if Trustee has received a current Appraisal from Trust's Appraiser, a copy of such Appraisal. 6.4 After the completion of a Sale Transaction for which a Provisional Loss Notice has been given, in order to receive compensation for such Loss from the Trust, Owner must notify Trustee within 90 days of said completion by delivering to MM La Trustee all of the following documents: a. the Conditional Release (in the form shown in Exhibit F hereto) reflecting the amount of the provisional Loss, executed by all of the Owners of the Protected Property, b. a copy of the recorded deed transferring fee title interest in the Protected Property from Owner, and c. a full and complete copy of all escrow instructions for the Sale Transaction, amendments to said escrow instructions and all related closing documents including Seller's closing statement. 6.5 Within 10 days of receipt of documents received pursuant to 6.3, Trustee will forward to Trustor .a copy of all of the following documents with respect to the Protected Property: a. documents received pursuant to 6.1; b. the current Appraisal received from Trust's Appraiser, if applicable, pursuant to 6.2; c. a copy of the Provisional Loss Notice given pursuant to 6.3; d. documents received pursuant to 6.4; e. the Valuation Notice received pursuant to 4.2; f. all of the Appraisals received pursuant to 4.3; and g. notice of the Initial Value pursuant to 4.5. 6.6 Trustor will make the final determination of Loss and compliance with the procedures established herein based on all of Lo the documents received by it pursuant to 6.5 within 20 days of receipt thereof, and if the amount of the Loss so determined is: a. equal to the amount calculated by Trustee in 6.2, Trustor will give notice ` of Loss to Trustee to pay the Loss to Owner. b. not equal to the amount calculated by Trustee, Trustor will give notice of Loss to Trustee to pay the final determination of Loss to Owner upon Trustee's receipt of a new Conditional Release reflecting Trustor's final determination of Loss. Article VII: Determination of Distributions 7.1 The total of all Distributions will be determined in accordance with the equation: DISTRIBUTIONS = A + B - C, wherein A.... is the then -current amount of cash held by the Trust B.... is the then -current remaining principal balance of the royalty interest held by the Trust, and C....is a cash reserve sufficient to cover all remaining expenses of the Trust. 7.2 The Distribution to Owners of Beneficial Property in the aggregate will be determined as an amount of cash equal to one third of the total of all Distributions determined pursuant to 7.1, and as to each such Owner, said cash amount divided by the number of Beneficial Properties. 7.3 The Distribution to City and the Distribution to Trustor W will each be determined as an amount of cash and a proportion of the royalty interest held by the Trust that in aggregate principal amount is equal to one third of the total of all Distributions determined pursuant to 7.1. 7.4 An example of determining Distributions is shown in Exhibit G. Article VIII: Procedure for Payment of Distributions 8.1 Within 30 days of the end of the Covered Period, Trustee will mail the Distribution Notice (in the form shown in Exhibit H hereto) by registered mail to each Owner of Beneficial Property. 8.2 Within 360 days of the end of the Covered Period, Trustor will give notice of Distribution to Trustee to pay the Distribution to Owners of Beneficial Property, the Distribution to City, and the Distribution to Trustor in the manner and amount determined pursuant to Article VIII. 8.3 If, after payment of Distributions and all remaining expenses of the Trust including Trustee fees, the remaining assets held by the Trust in principal amount is: a. greater than $1,000, Trustee will pay additional Distributions with respect to such remaining assets pursuant to 8.2, or if b. less than $1,000, Trustee will pay a final Distribution to City with respect to all such remaining assets. 8.4 When payment of all Distributions have been completed pursuant to 8.2 and 8.3 and there are no assets remaining in the Trust, Trustee will terminate this Trust. Article IX: Insufficiency of Cash or Assets Held by the Trust - 10 - 9.1 Any time the cash balances held by the Trust are insufficient to pay expenses, Losses and/or Distributions to Owners of Beneficial Property in cash, Trustee will give notice to Trustor of the amount of such cash insufficiency. 9.2 Within 10 days of receipt of Trustee's notice pursuant to 9.1, Trustor, in its sole and absolute discretion, will either: a. direct Trustee in writing to suspend any or all such payments until such time that the Trust has sufficient cash to make payments, in which case payments will be increased for interest at the rate of 10% per annum accruing from when such payments were first due until paid, or b. provide supplemental cash to the Trust by a demand loan secured by the assets held by the Trust and accruing interest at 10% per annum until such loan is repaid. 9.3 At any time the outstanding expenses and Losses are determined to exceed the total assets held by the Trust, Trustor in its sole and absolute discretion, will either a. direct Trustee in writing to suspend any or all such payments until such time that the total of all payments is known, in which case payments will be decreased in proportion to an aggregate amount equal to the assets held by the Trust, or b. provide supplemental assets to the Trust by contribution of additional cash and/or additional royalty interests. 9.4 Notwithstanding anything herein to the contrary, under no circumstances is Trustor under any obligation, compulsion or duty to provide or contribute supplemental cash or assets to the Trust beyond those deposited pursuant to 2.1 and Trustor makes no representation or warranty as to the sufficiency thereof for the purposes of this Trust. 9.5 Notwithstanding anything herein to the contrary, under no circumstances is Trustee under any obligation, compulsion or duty to make any payment whatsoever hereunder until and unless the cash balances and assets of the Trust are deemed sufficient to make such payment in Trustee's sole and absolute discretion. Article X: Definitions a. "Appraisal" means a determination of the then -current Fair Market Value of a Protected Property by an Appraiser as documented on a FNMA or FHLMC approved form. b. "Appraiser" means a natural person qualified to determine the Fair Market Value of a Protected Property and who at the time used is a professional member in good standing of either the Society of Real Estate Appraisers (with an SRA, SRP or SREA designation) or the American Institute of Real Estate Appraisers (with an MAI or RM designation) and who has principal offices located within 50 miles of City. c. "Beneficial Property" means a Protected Property for which no Loss has been claimed or paid by the Trust. d. "City" means the City of Huntington Beach, California, a California municipal corporation. e. "Commencement Date" means the date upon which Trustor elects to commence determination of the Initial Value. f. "Commission" means the realtor fee or sales commission =WM W paid by or charged to an Owner for brokerage services in a Sale Transaction expressed as a decimal fraction of the Sales Price. g. "Covered Period" means the period of time commencing with the date City issues permits to drill oil wells on the Drill Site to Trustor and ending on the date in which Trustor completes drilling and last removes or causes to be removed oil drilling rigs on the Drill Site. h. "Distribution" means a payment of money and/or a conveyance of royalty interest to Owners of Beneficial Property, City and Trustor, as determined in accordance with Article VII. i. "Drill Site" means the parcel of real property bounded by Delaware Street on the east, California Street on the west, Springfield Avenue on the north and Rochester Avenue on the south,* in the city of Huntington Beach, California. j. "Fair Market Value" means the highest price at which an informed buyer and an informed seller, neither being under any compulsion to buy or sell, would mutually agree to buy and sell, and which price reflects all of the facts and circumstances of the property and the market place at that time. k. "FNMA" means the Federal National Mortgage Association. 1. "FHLMC" means the Federal Home Loan Mortgage Corporation. M. "Initial Value" means the Fair Market Value of a Protected Property established within 120 days of the - 13 - L0 Commencement Date as determined in accordance with Article IV. n. "Loss" means a relative decline in Fair Market Value of a Protected Property realized by an Owner in a Sale Transaction completed during the Covered Period as determined in accordance with Article V. o. "Market Index" means the ratio that the most recent Price Index published on or before the date of the Claim Notice bears to the most recent Price Index published on or before the Commencement Date. p. "Owner" means a person or persons owning fee title interest in a Protected Property from time to time during the term hereof, or in a Beneficial Property as of the last day of the Covered Period, but does not include persons or entities holding security interests, leasehold interests, deeds of trust, bankruptcy estate interests or other possesory interests, mortgages of any kind, financing statements, liens of any kind, pledges, tenancies, and estates for years. q. "Owner's Appraiser" means the Appraiser designated by Owner on a Valuation Notice. r. "Price Index" means the Index of Market Prices of Existing Single Family Homes (Southern and Beach portions of Orange County) as determined by the Real Estate Research Council of Southern California in its Semi -Annual Home Price Surveys and as published in its Real Estate and Construction Report in the first and third quarters of each year. S. "Protected Property" means each of those parcels of surface lands together with any improvements thereon, - 14 - excluding the Drill Site itself, having any portion of their surface lying within the area formed by extending the curb line of the Drill Site 100 feet in all directions, as listed in Exhibit A. t. "Sales Price" means the consideration offered and paid to an Owner in exchange for his or her fee title interest in a Protected Property in a Sale Transaction. U. "Sale Transaction" means a transaction wherein an Owner transfers his or her fee title interest in a Protected Property to a new Owner in a bona fide arms' length sale at a price no less than the Fair Market Value of the Protected Property at the time of the sale, but does not include foreclosure sales (judicial or non -judicial); subsequent sales by foreclosing lenders, other trust deed holders and other lien holders; transfers by judicial order; transfers resulting from Bankruptcy petitions; intra-family transfers for less than full consideration; tax sales; sales by Bankruptcy trustees or debtors -in -possession; sales by operation of law and/or successors to the fee title interest in the Protected Property by any other means. V. "Trust" means the Springfield Property Trust established by Trustor and administered by Trustee for the purposes described herein. W. "Trust's Appraiser" means the Appraiser designated by the Trust. Article XI: Miscellaneous Provisions 11.1 In the event that any provision of this Trust is held by a court of competent jurisdiction to be unenforceable or invalid, such holding shall not render unenforceable any other provision - 15 - hereof, each provision hereof being expressly severable and independently enforceable as permitted by law. 11.2 No interest in the principal or income of this Trust shall be anticipated, assigned, encumbered, or subjected to any creditor's claim or legal process before actual receipt of cash or equivalent payment by any Owner. The Trustee shall not have the power to make payment from the Trust corpus or its income other than in accordance with the claims process and final distribution procedures established herein. No Owner or any person claiming under an Owner will have the power to anticipate, separate, partition, or dispose of any right, title, interest or benefit of this Trust until the same has been paid by Trustee. 11.3 This Trust may be amended by Trustor and Trustee without the consent of any other party, provided that: a. the amendment is necessary to obtain or maintain Trustor's right, permission or authority to conduct all of the operations contemplated by Use Permit 86-7; or b. the amendment shall not adversely affect Owners who have incurred a Loss prior to any such amendment. 11.4 This Trust may be terminated and the assets returned to Trustor without the consent of, or obligation to, any other party if, in the reasonable judgement of Trustor, Trustor cannot obtain or maintain Trustor's right, permission or authority to conduct all of the operations contemplated by Use Permit 86-7. 11.5 Unless otherwise proscribed or excluded herein, the terms and conditions of this Trust shall inure to the benefit of and be binding on the successors in interest of Trustee, Trustor and Owners. 11.6 Except where otherwise provided herein with respect to - 16 - IM specific notices, all notices given under this agreement will be in writing and will be effective when first delivered. Addresses for the giving of notices will be: a. If to Trustee: Trust Services of America, Inc. 700 Wilshire Boulevard Los Angeles, California 90017 Attn: Corporate Trust Department b. If to Trustor: ANGUS Petroleum Corporation 350 Indiana Street - Suite 600 Golden, Colorado 80401 Attn: Land Department c. If to Owner: The name and address as provided by Trustor pursuant to 2.2(a) and 2.2(b). 11.7 In the event of a dispute among Trustor, Owners or City with respect to payments of Loss or Distributions, Trustee is authorized and directed to retain in its possession without liability to anyone, all or any part of said payments until such dispute has been resolved. 11.8 This agreement shall be construed and regulated, and its validity and effect shall be determined by, the laws of the State of California as such laws may from time to time exist. - 17 - GZ TRUSTOR ANGUS PETROLEUM CORPORATION � By: ��lA/�S Willia J.Imy Date Treasur Vic President TRUSTEE TRUST SERVICES OF AMERICA, INC. By: o and J. I dor Date Senior Vice President By: /F.d d Go n L. Cox Date T t Officer - 18 - PN EXHIBIT A SPRINGFIELD PROPERTY TRUST PROTECTED PROPERTY Block or Assessor # Property Address Lot(s) Tract (25-) 1717 California St. 9 & 10 1703 088-09 1801 California St. 1 1803 087-05 1803 California St. 2 1803 087-04 1805 California St. 3 1803 087-12 1807 California St. 4 1803 087-13 1809 California St. 5 1803 087-07 1811 California St. 6 1803 087-24 1813 California St. 7 1803 087-23 1815 California St. 8 1803 087-22 1817 California St. 9 1803 087-21 1819 California St. 10 1803 087-25 1718 California St. ll & 12 1704 084-08 1902 California St. 20 1904 082-19 1904 California St. 19 1904 082-20 1717 Delaware St. 9 & 10 1704 084-07 1901 Delaware St. 1 1904 082-24 1903 Delaware St. 2 1904 082-23 1718 Delaware St. 29 (N35) 7755 132-60 1720 Delaware St. 30 (S30) 7755 132-61 1724 Delaware St. 30 (N30) 7755 132-62 1802 Delaware St. 31 (S30) 7755 132-63 1804 Delaware St. 31 (N30) 7755 132-64 1806 Delaware St. 32 (S30) 7755 132-65 1808 Delaware St. 32 (N30) 7755 132-66 1810 Delaware St. 33 (S30) 7755 132-67 1812 Delaware St. 33 (N30) 7755 132-68 1814 Delaware St. 34 (S30) 7755 132-69 1816 Delaware St. 34 (N30) 7755 132-70 1818 Delaware St. 35 (S30) 7755 132-71 1820 Delaware St. 35 (N30) 7755 132-72 1824 Delaware St. 36 (S30) 7755 132-73 1826 Delaware St. 36 (N40) 7755 132-74 EXHIBIT B Op" SPRINGFIELD PROPERTY TRUST VALUATION NOTICE PROTECTED PROPERTY: Dear Owner (s) : Our records indicate that as of you are the owner of record of the subject property and therefore you are eligible to participate in the benefits of the Springfield Property Trust. One of these benefits is to receive compensation from the Trust in the event you sell, your property at a loss during: certain periods (all as more fully described in the Spring field) Property Trust Agreement). To be eligible for this loss benefit, the appraised value of your property must be determined within the next 120 days. The Trust has retained for this purpose, but you may also designate a qualified appraiser (professional members of SREA or AIREA) if you wish. A list of: all the qualified appraisers in the area is attached for your convenience. The Trust will pay the reasonable and customary appraisal fees involved. Please indicate your acceptance at the bottom of this letter and return it to the Trustee in the envelope provided. If we do not receive your response by you will not be eligible to participate in this loss benefit of the Trust, however you do not need to have your property valued to still be eligible to receive the distribution benefit of the Trust. Sincerely, Trust Services of America, Inc. Trustee for the Springfield Property Trust I wish to participate in the loss benefit as provided in the Springfield Property Trust, and I agree to allow , and the appraiser I have designated below, if any, and any third appraiser selected by them, to enter and examine my property for purposes of determining its physical condition and fair market value. (Appraiser Name) (Appraiser Address) Accepted and agreed to this day of , 1987. r*. EXHIBIT C SPRINGFIELD PROPERTY TRUST EXAMPLE OF DETERMINING LOSS Assumptions: Initial Value Market Index Sales Price Commission Losses paid to prior Owners Determination of Loss:` LOSS = (A x B) - C A = (147,000 x 1.105) - (158,000) B = 1.000 - .060 C = LOSS = (A x B) - C = (4,435 x .940) - 1,100 $ 147,000 1.105 $ 158,000 .060 $ 1,100 $ 4,435 .940 $ 1,100 $ 3,069 0 EXHIBIT D SPRINGFIELD PROPERTY TRUST CLAIM NOTICE PROTECTED PROPERTY: To: Trustee for the Springfield Property Trust Notice is hereby given of a pending sale transaction on the subject property. I have attached hereto a copy of the agreement to sell and a copy of the listing contract with my real estate agent, if any. I represent and warrant that, to the best of my knowledge, these documents reflect fully and completely the contemplated sale transaction in all material respects. I agree to allow Trust's Appraiser, to enter and examine my property for purposes of determining its physical condition and fair market value. I understand that should this sale transaction result in a loss for which,I receive compensation from the Trust, the protected property shown above will not be eligible for the distribution benefit under the terms of the Trust. Accepted and agreed to this day of , 19 (Owners's Name) (Owner's Signature) I represent and warrant that, to the best of my knowledge, the attached documents reflect fully and completely the contemplated sale transaction in all material respects. (Sig. of Owner's Real Estate Agent) (Da to ) EXHIBIT E � SPRINGFIELD PROPERTY TRUST PROVISIONAL LOSS NOTICE PROTECTED PROPERTY: TO: Owner The Trustee under the Springfield Property Trust has received documents from you in connection with a pending sale transaction on the subject property. The determination of the provisional loss in this sale transaction is as shown below. The provisional loss is only an estimate and is subject to final review and adjustment by the Trustor as more fully described in the Springfield Property Trust Agreement. Sincerely, Trust Services of America, Inc. Trustee for the Springfield Property Trust (Trustee to check all that apply) The provisional loss has been estimated to be $ The provisional loss cannot be determined at this time because the documents received are incomplete, inconsistent or otherwise inadequate for purposes of determining the provisional loss. An appraisal has been ordered on the subject property to determine its current fair market value. A copy of the current appraisal ordered on the subject property is enclosed. !1. EXHIBIT F SPRINGFIELD PROPERTY TRUST CONDITIONAL RELEASE PROTECTED PROPERTY: TO: Trustee for the Springfield Property Trust Upon being paid the sum of from you, and subject only to that condition, I hereby release and hold harmless the Springfield Property Trust, its Trustee and its Trustor of any and all claims I at any time now or in the future may have had with respect to the subject property. This conditional release will become an unconditional release effective on the day the aforesaid sum is received by me. I understand that I am waiving any and all rights I may have under the provision of Section 1542 of the Civil Code of the State of California, which section reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him, must have meterially affected the settlement with the debtor". Signed this day of , 19 (Owner's Signature) (Owner's SS No.) EXHIBIT G SPRINGFIELD PROPERTY TRUST EXAMPLE OF DETERMINING DISTRIBUTIONS Assumptions: Cash held by Trust $ 470,000 Remaining principal balance of royalty interest $ 350,000 Cash reserve $ 10,000 Number of Beneficial Properties 27 Determination of total of all Distributions DISTRIBUTION = A + B - C 470,000 + 350,000 - 10,000 = $ 810,000 Determination of Distribution to Owners of Beneficial Property Cash to all Owners = $ 810,000/3 = $ 270,000 Cash to each Owner = $ 270,000/27 = $ 10,000 Determination of Distribution to City and Distribution to Trustor To each = $ 810,000/3 = $ 270,000 ..as cash = ($ 470,000 - 270,000 - 10,000)/2 = $ 95,000 ..as royalty = $ 350,000/2 = $ 175,000 Total cash and royalty to each = $ 270,000 Vol EXHIBIT H SPRINGFIELD PROPERTY TRUST DISTRIBUTION NOTICE BENEFICIAL PROPERTY: Dear Owner (s) : Our records indicate that as of you are the owner of record of the subject property, that that property has not experienced a loss that was compensated for by the Springfield Property Trust, and that therefore you are eligible to participate in the distribution benefit of the Trust. This benefit entitles you to receive a.sharing in the remaining assets of the Trust. The amount of the benefit will be determined within 360 days. Shortly after it is determined, we will be sending you a check for your share. We ask that you please keep us advised of your current address. Checks still undelivered after 60 days will have to be redistributed among the remaining eligible owner8,. Sincerely, Trust Services of America, Inc. Trustee for the Springfield Property Trust Signed this day of , 19 (Owner's Signature) (Owner's SS No.) AGREEMENT FOR SUBSTITUTION AND APPOINTMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE This Agreement is entered in to this llth day of July , 1989 by and among the following: (1) TRUST SERVICES OF AMERICA, a California corporation, hereinafter referred to as "TSA", as Trustee of Trust Number 61-5164-00-1 (2) ANGUS PETROLEUM CORPORATION, a Delaware corporation, hereinafter referred to as "ANGUS" and (3) FIRST AMERICAN TRUST COMPANY, a California corporation, hereinafter referred to as "First American", RECITALS WHEREAS, TSA is the current Trustee under .the Springfield Property Subdivision Trust Agreement, under TSA's Trust Number 61-5164-00-1 hereinafter referred to as the "Trust Agreement", executed as of the 8th day of January 1988, and . WHEREAS, TSA and ANGUS have entered into a Services Agreement, dated January 8, 1988, hereinafter referred to as the "Services Agreement"; and WHEREAS, TSA agreed to perform certain services required of the Trustee under the Trust Agreement and Services Agreement; and WHEREAS, TSA desires to resign as Trustee and terminate its responsibilities under the Service Agreement; and WHEREAS, ANGUS wishes to appoint First American as Successor Trustee and wishes to release TSA from the continuing duties and obligations set forth in the Trust Agreement, and the Services Agreement, provided First American accepts appointment as Successor Trustee and enters into a new Servicing Agreement with ANGUS concurrently therewith and provided that TSA shall not assess nor be entitled to any termination fee under either the Trust Agreement or the Services Agreement; and WHEREAS, First American agrees to accept its appointment as Successor Trustee and agrees to act as Agent under a new agreement substantially in the form of the Servicing Agreement and which is attached hereto as Exhibit "A"; and NOW THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1 LO 1. TSA and ANGUS do hereby agree to waive any written notice of ANGUS' election to appoint a Successor Trustee and hereby amend the Trust Agreement to the extent necessary to allow First American to succeed to trusteeship in the place and stead of TSA. 2. TSA shall not change or assess any termination fee to ANGUS under the Trust Agreement or the Services Agreement. TSA shall be entitled only to the appropriate monthly administration fee plus its appropriate prorated portion of the annual administration fee as these are set forth in the Services Agreement. 3. ANGUS does hereby appoint First American as Successor Trustee to perform the duties and obligations of Trustee under terms and conditions of the Trust Agreement. 4. First American does hereby accept its appointment as Successor Trustee and agrees to assume and be bound by all the obligations and duties set forth in the Trust Agreement. 5. TSA does hereby assign all of its rights, duties, and powers under the Trust Agreement, and assigns all its right, title and interest in and to the Trust Property and the Trust Agreement to the Successor Trustee, as appointed herein. TSA further agrees to execute and deliver to Successor Trustee any and all documents reasonably necessary to transfer to. First American all of TSA's right, title or interest in or to the Trust Property. 6. ANGUS does hereby release TSA from any and all obligations and duties under the Trust Agreement and as to the trust estate. ANGUS acknowledges that all such obligations and duties shall be performed by, and are the responsibility of, First American. 7._ TSA does hereby agree to indemnify and hold harmless First American as Successor Trustee, against suit, actions, claim, demand, lien, loss, damage, fine, judgement or decree, or any expenses in connection with the foregoing, including reasonable attorneys' fees, arising from TSA's acts or omissions while acting as Trustee during the period from the inception of the Trust to the date of execution of this Agreement. 8. First American, as Successor Trustee, does hereby indemnify and hold harmless TSA against suit, action, demand, lien, loss, damage, fine, judgment or decree, or any expenses in connection with same including reasonable attorneys' fees, arising from acts or omissions of First American while performing the duties and obligations of Trustee under the Trust Agreements. 9. In the event of any legal action or proceeding to enforce or declare the effect of any provision of this Agreement, the prevailing party in such action or proceeding shall be 2 FO- entitled to recover from the other party all costs and attorneys' fees incurred therein by the prevailing party. 10. ANGUS, its successors and assigns, does hereby agree to indemnify and hold harmless First American from and against all liabilities, fees (including reasonable attorneys' fees), damages, costs, and expenses that First American may incur, directly or indirectly, as a result of the performance of its duties as Trustee, under the terms of the Trust. This indemnity shall not be limited or terminated by the appointment of a Successor Trustee or termination of the Trust. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. TRUST SERVICES OF AMERICA, a California corporation ("TSA") By. Its: .52Allole 1144%/'�.�5/GAT BY //,- , et ` s:Av�j�/'u �h ANGUS PETROLEUM CORPORATION, a Delaware corporation ("ANGUS") By: Its: Vice President By: Its: FIRST AMERICAN TRUST COMPANY, a California corporation ("F' st Ameri an") By: I V t&t- By. Its: �i►nw...� b hF-c.c.s THE FOREGOING IS CONSENTED TO AND APPROVED: CITY U NGT CH By: By: ` 3 SERVICES AGREEMENT This Agreement is made on the day last executed below by and between ANGUS Petroleum Corporation, a Delaware corporation ("Trustor") and first American Trust Company, a California corporation ("Agent") for the following reasons: (A) Trustor desires to purchase certain services from Agent, and (B) Agent desires to provide those services for compensation. Based on the foregoing reasons, and other good and valuable considerations the receipt and sufficiency of which is hereby acknowledged, Trustor and Agent agree as follows: Article I: Services to be provided by Agent 1.1 Agent will perform all of the duties imposed upon Trustee under the Trust Agreement including the filing of tax information reports as required by law. 1.2 Agent will obtain all supplies, postage, telephone, stationary and other items that Agent deems necessary for the performance of its duties hereunder. Article II: Compensation to be paid to Agent 2.1 The Trust (or if the balance of cash held by the Trust is insufficient, Trustor) will pay Agent for its services pursuant to 1.1, as follows: a.} from the date hereof to the Commencement Date, a monthly administration fee of $300 per month, payable by the 15th day of each such month, b.) from the Commencement DAte to the date the Trust is terminated, an annual administration fee of $10,000 per year (or pro-rata portion thereof for a partial year), payable by January 15th of each such year, and c.) on the date the Trust is terminated, a termination fee of $2,500, payable on the day the Trust is terminated. 2.2 The Trust (or if the balance of cash held by the Trust is insufficient, Trustor) will pay and/or reimburse Agent for all expenses it incurs pursuant to 1.2, within 10 days of receipt of Agent's invoice for such expenses. 2.3 The Trust (or if the balance of cash held by the Trust is insufficient, Trustor) will pay Agent additional fees for any additional services it might provide, including but not limited to the filing of income tax returns for the Trust, as Agent and Trustor may hereafter mutually agree. Article III: Conditions of Accent's Duties 3.1 Trustor agrees that Agent shall be entitled to rely upon the genuineness and validity of signatures of Trustor, and to rely and act or refrain from acting on the basis of any notice, instrument, instruction or other document believed by Agent to be signed by Trustor. 3.2 TRustor agrees that Agent shall have the right to resign hereunder effective 30 days after receipt by Trustor of written notice thereof, and Agent agrees that Trustor shall have the right to remove Agent hereunder effective 30 days after receipt by Agent of written notice thereof. In either case, Agent shall deliver cash balances net of any fees due, royalty interests, and files of the Trust to such successor Agent as Trustor designates by written notice to Agent. 3.3 Trustor agrees to indemnify Agent for, and to hold it harmless against any loss, liability or expense incurred (including the reasonable costs and expenses of defending itself against any such claims thereof), arising out of or in connection with the performance by Agent of its duties hereunder except-ing only Agent's negligence, fraud, bad faith or breach. Article IV: Miscellaneous Provisions 4.1 The term of this Agreement shall be from the day last executed below to the day the Trust is terminated, unless earlier terminated by resignation or removal pursuant to 3.2. 4.2 All capitalized terms not defined herein shall have the same meaning as those shown in Article X of the Springfield Property Trust Agreement of even date herewith (herein the "Trust Agreement"). 4.3 The provisions contained in Article XI of the Trust Agreement are incorporated herein by reference as though set forth in full be changing "Trustee to "Agent", changing "Trust" to this Agreement", and by otherwise changing as the context dictates mutatis mutandis. f P, ANGUS PETROLEUM CORPORATION, a Delaware corporation ("Trustor") By: _�ryit Ca`i��t /Its: Vice President By: Its: FIRST AMERICAN TRUST COMPANY, a California corp or ion By I t s .\,,_ Vice Pmidmt By. Its: -14".w f%.. PG&E Resources 1 a� '988 N. Central Expressway, Sine 1000 p y atlas, Texas 75206-3922 �3 _ 5 Telephone 2141750-3800 FAX 2141750.3883 March 16, 1994 City of Huntington Beach, California 2000 Main Street Huntington Beach, California Attn: Michael T. Uberuaga City Administrator RE: Assignment of Conveyance of Production Payment Royalty Interests Springfield Unit/Block 1804 Vista Del Mar Tract Section 5 City of Huntington Beach Orange County, California Gentlemen: Attached for. execution by the City are 3 copies of the captioned Assignment. This Assignment effectively assigns an existing Production Payment 1/2 to the City of Huntington Beach and 1/2 to Angus Petroleum Corporation. Please execute all 3 copies and return 2. This Production Payment was established, pursuant to Special Use Permit 86=7, as part of a Trust Account to compensate "across the street" neighbors for losses which were incurred during the drilling phase of the Springfield Unit project. The neighbors were paid and the Trust terminated. The Trustee has executed the attached Assignment. This Production Payment of $750,000 payable out of the production from the Springfield Unit is now payable 1/2 to the City and 1/2 to Angus. For reference purposed, a copy of the Trust Agreement of 1/8/88 is also attached. If you have an questions, please call me at (214). 750-3864. Very trult �A G e W. Anderson Onshore Land Manager GWA:sr cc: John Carmichael/Huntington Beach Office InA PG&E Enterprises Company 89-270bv4 89-579276 EXHIBIT "A" Recording Requested By: ANGUS Petroleum Corporation IlECORDEDINOFFICIAL RECORDS OF ORANGE COUNTY. CALIFORNIA Air 'MAY 2 2'89 When Recorded Return To: ANGUS Petroleum Corporation 5772 Bolsa Avenue, Suite 210 Q vRECORDER Huntington Beach, California 92649 C1.9 qq�I f CONVEYANCE OF PRODUCTION PAYMENT ROYALTY INTEREST Ij r- ANGUS PETROLEUM CORPORATION (herein called "Grantor"), a Delaware corporation, with offices at 350 Indiana Street, Suite G00, Golden, Colorado 80401, for and in consideration of the sum of Ten ($10.00) Dollars and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, does hereby BARGAIN, SELL, TRANSFER, ASSIGN _and CONVEY unto TRUST SERVICES OF AMERICA, INC., TRUSTEE FOR THE SPRINGFIELD PROPERTY TRUST (herein called "Grantee") , whose address is 700 Wilshire Boulevard, Los Angeles, California 90017, its successors and assigns, a production payment royalty interest (the "Royalty Interest") equal to one hundred (100%) percent of that portion of the oil and gas produced from (or, to the extent unitized by the Springfield Unit or otherwise, attributable to) Block 1804 of the Vista Del Mar Tract, Section 5, City of Huntington Beach, Orange County, California ("Subject Lands") , under and pursuant to that certain Oil and Gas Lease 1 ("Subject Lease") from Lawrence A. Stevenson, et al., to D. D. Dunlap Oil Company (dated June 28, 1943, recorded in Book 2474, Page 425, Book 2467, Page 209, Book 1235, Page 340, Book 2246, Page 525, Book 2239, Page 149 and Book 2595, Page 597, Records of Orange County, California) which is attributable (after giving effect to landowner's royalty provided for in such lease and to .overriding royalties shown of record in Orange County, California) to the interest of Grantor in Subject Lease insofar as it covers Subject Lands, from and after the Effective Date (hereinafter defined) and prior to the time (the "Termination Point") at which Grantee has received, from gross proceeds of production attributable to the Royalty Interest, Seven Hundred and Fifty Thousand ($750,000.00) Dollars. At such time as the Termination Point occurs, the Royalty Interest shall automatically terminate, and all rights herein conveyed shall automatically revert to Grantor, its successor and assigns (no release or reconveyance from Grantee shall be required however, should Grantor, its successors or assigns; so request Grantee will execute a recordable instrument further evidencing such termination). The Royalty Interest shall not be payable with. respect to oil or gas unavoidably lost in the production thereof or used by Grantor in conformity with good oilfield practices.for exploring, developing, operating and/or maintaining the Subject Lands (without limitation, including those used in secondary or tertiary recovery operations) or lands now or hereafter pooled or unitized therewith; provided, however, that if, rather than using oil or gas produced from the Subject Lands, Grantor should acquire oher LtC�)ci C-11C1 S &77. SUUL�cvi or not such oil or gas acquired from other sources are the same as, or similar to, those produced from Subject Lands) used -by it in the course of such operations, the Royalty Interest shall bear its part of the actual cost of acquiring such oil or gas. . As between Grantor and Grantee, Grantor shall have exclusive charge, management and control of all operations conducted on the Subject Lands and/or Subject Lease and/or lands pooled or unitized therewith in who\le or in part with other lands, leases 1 HEREBY DE( COME TARY TRANSFER 99"579276 TAX IS S, Jam. �0 t, THE TAX «: `�zr.� /,..QP.f. COMPUTED ON FULL VALUE OF PROPERTY EXHIBIT "A" CONVEYEDi OR, UTED ON FULL VALUE. LESS LIENS AND ENCUM R MAINING AT TIME Of SALE. ;Ir.,plltTURE OF DECIARA OR AGENT— NA" or interests (and the reconfiguration, or partial or total termination, of now or hereafter existing units), and the basis on which production from units so created is allocated (or re- allocated through amendment, supplement, modification or otherwise), and the maintenance in force and effect of the Subject Lease, shall be solely at the will of Grantor and (without limitation of the preceding sentence) the rights of Grantor hereunder to have exclusive charge, management and control of operations is specifically inclusive of such.rights. The royalty interest is subject , to. that certain Unit Agreement for the Springfield Unit (the unit formed thereby, as the same is from time to time constituted,, being herein sometimes called the "Springfield Unit"), dated as of March 31, 1987, executed by Grantor and recorded under File No. 87-173292, Records of. Orange County, California. Grantor hereby warrants and agrees to defend title to .the Royalty Interest against the claims and demands of all persons claiming or to claim the same by, through or under Grantor, but not otherwise. This Conveyance.is made with full subrogration in and to all covenants and warranties by others heretofore.given or made. IN WITNESS WHEREOF, this instrument is executed this loth , day of May , 1989, effective as to runs of oil and deliveries of gas, and for all other purposes, July 1, 1989 at 7 o'clock a.m., Pacific Daylight Time. CORPORATION Attest: Marj C. ntworth, Assistant Robert B. Kay se President Secretaig STATE OF COLORADO ss. COUNTY OF JEFFERSON On this loth day of May , 1989, before me, a Notary Public in and for the State of Colorado, personally appeared ROBERT B. KAYSER, known to me to be the President of ANGUS PETROLEUM CORPORATION, a Delaware corporation, wriich corporation executed the foregoing instrument, and acknowledged to me that such corporation executed the same. i0J, AM/ /Y 47 �/ iOJvt i otary Publ c in and for the State of Colorado My Commission expires: October 2, 1989 Geraldine Jehrer-Norris (printed name) ' 44 ASSIGNMENT OF CONVEYANCE OF PRODUCTION PAYMENT ROYALTY INTERESTS THIS ASSIGNMENT is made effective as of 7:00 o'clock a.m., Pacific Standard Time, the 16th day of October, 1992, by and between FIRST AMERICAN TRUST COMPANY, a California corporation (herein referred to as "FIRST AMERICAN") as GRANTOR, 421 North Main Street, Santa Ana, California 92701, and ANGUS PETROLEUM CORPORATION, a Delaware corporation (herein referred to "ANGUS"), 6688 North Central Expressway, Dallas, Texas 75206, and THE CITY OF HUNTINGTON BEACH, (herein referred to as "CITY") a municipal corporation, 2000 Main Street, Huntington Beach, California 92648 (herein jointly referred to as "GRANTEE"), with reference to the following: A. That certain Conveyance of Production Payment Royalty Interest dated May 10, 1989 (effective as to runs of oil and deliveries of gas and for all other purposes July 1, 1989 at 7:00 o'clock a.m. Pacific Daylight time), by and between ANGUS, as Grantor, and TRUST SERVICES OF AMERICA, INC., Grantee, wherein Grantor bargained, sold, transferred, assigned and conveyed to Grantee a production payment royalty interest equal to 100 percent ("the Royalty Interest") of that portion of the oil and gas produced from (or to the extent unitized by the Springfield Unit or otherwise attributable to Block 1804 of the Vista Del Mar Tract, Section 5, City of Huntington Beach, Orange County, California ("Subject Lands"). Said Conveyance was recorded on May 22, 1989, Official Records of Orange County, California, as Document No. 89-270064. B. That certain Assignment of Conveyance of Production Payment Royalty Interest ("the Assignment of Conveyance") dated October 25, 1989, by and between ANGUS, FIRST AMERICAN, and TRUST SERVICES OF AMERICA, INC., TRUSTEE FOR THE SPRINGFIELD PROPERTY TRUST, wherein TRUST SERVICES OF AMERICA, INC. bargained, sold, transferred, assigned and conveyed to FIRST AMERICAN the Royalty Interest. Said Assignment of Conveyance of Production Payment Royalty was recorded on October 27, 1989, Official Records of Orange County, California, as Document No. 89-579276. It is the intent of this Assignment of Conveyance of Production Payment Royalty Interest that FIRST AMERICAN assign, transfer and set over unto ANGUS as to 50.00%, and the CITY OF HUNTINGTON BEACH as to 50.00% of all of FIRST AMERICAN's right, title and interest in and to the Royalty Interest hereinabove described, subject, however, to the terms and conditions as set forth in said Conveyance of Production Payment Royalty Interest. NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is agreed as follows: 1. FIRST AMERICAN TRUST COMPANY hereby bargains, sells, transfers, assigns and conveys unto ANGUS PETROLEUM CORPORATION as to an undivided 50.00%, and THE CITY OF HUNTINGTON BEACH as to an undivided 50.00%, their successors and assigns, all rights of FIRST AMERICAN acquired pursuant to said Assignment of Conveyance of Production Payment Royalty Interest referred in Recital B. above, together with any and all other rights acquired by FIRST AMERICAN pursuant in and to said Assignment of Conveyance subject to the terms, conditions and restrictions as set forth in the Conveyance of Production Payment Royalty Interest, it being intended that FIRST AMERICAN hereby relinquishes all . interests whether referred to in this Assignment or not acquired in said Assignment of Conveyance of Production Payment Royalty. 2. FIRST AMERICAN further bargains, sells, transfers and assigns unto ANGUS as to an undivided 50.00%, and to the CITY as to an undivided 50.00% any rights or interests of FIRST AMERICAN provided for under that certain Agreement for Substitution attached to said Assignment of Conveyance of Production Payment Royalty Interest as Exhibit "C". Nothing in this Conveyance shall have any effect whatsoever on those certain indemnification provisions in favor of First American contained in said Agreement for Substitution. IN WITNESS WHEREOF, the this Assignment the day and Michael Uberuaga and Connie this day of December, parties hereto have executed year first above written. -Brockway are executing this Assignment 1994 GRANTOR FIR By: GRANTEE ANGUS Pet le m oration By - Title: / ✓ �s. - /'.��.1�a� //y/, C OF HUNTINGTON BEACH Title: City Administrator ATT ST: APPROVED AS T FOP!',: City le k City Attorney STATE OF CALIFORNIA 1 COUNTY OF ORANGE On this a Bjl j_ day of . , 1994, before me,/ a Notary Public in and for the aforesaid State personally appeared '/-f&- Y ar&Z T. 4jagAu.��, known to me to be Michael T. Uberuaga, City Administrator and known to me to be the City Clerk of the CITY OF HUNTINGTON BEACH, ALIFORNIA, the municipal corporation that executed the foregoing instrument, known to me that be the persons who executed the within instrument on behalf of said municipal corporation and acknowledged to me that such municipal corporation executed the same. ftom MAYBRICE L JOHNSON COMM. # 991836 v uiv a yv Notary PtVIC — CaNbmia Notary Pu is ORANGE COUNTY WMj Comm. Expires MAY 11,1997 arsonal History Stetemec 'he following information is requested of you for verification and contact purposes: 1. Your Name Please print or a Last First I_JE:KL57_ YAJS DF\VT E� Middle H FVS-i Other names (including nicknames) you have used or been known by: M/A 2. Please list address at which you can be contacted. Number Street City J'J5I l_'Arf t . ,J-/ State i / F I --- T F! Zip Code 17'i L f 1 r I Please list the local telephone number(s) at which you can be contacted. ( 7 6 t 11 E Al Hrs. you can be contacted: 4 (`�(b1-`� i� 1 Hrs. you can be contacted: 4. Birthdate 5. You must be a citizen of the United States or a permanent resident alien who is eligible citizenship. Can you provide such documentation? E,Yes ❑ No for and has applied for (Month) I � (Day) C,1 (Year) 7 ' T 6. Social Security Number (In accordance with the Federal Privacy Act of 1974, disclosure is voluntary. Identification purposes to ensure that proper records are obtained.) The SSN will be used for __ 7. For the purposes of Identification, lease provide the following: Height Li I (� f r Weight L I} ;i Hair Color C R Ai Eye iColorp Scars, tatoos, or other distinguishing marks �lpt elative ;. and References During the course of the background investigation, persons who know you will be asked to comment upon your suitability for the position of peace officer. Inquiries will be confined to job -relevant matters. 8. Please supply the appropriate information In the spaces provided below. If a category is not applicable, write in "N/A." Address where person can be contacted Telephone at which If living, name of your: (Include City, State and Zip Code) person can be contacted Father '� �(�..1_ rnI-CRA I P i7111� I3Ll0-9 1'3( MIKE 0 L �1 _� %�R_' `: )�r� (z) Horne ( ) Work ( ) Other (,Y) Home ( ) Work ( ) Other ihLAJT U- P. ALA G��';t�) Fi A N DEKr_4Qi Y.A%': A<. (u) Home ( ) Work ( ) Other ()i) Home ( ) Work ( ) Other Father -in -Law Al / A ( ) Home ( ) Work ( ) Other ( )Horne ( ) Work ( ) Other Mothor-in-Law A ( ) Home ( ) Work ( ) Other ( ) Home ( ) Work ( ) Other Spouse )V /A ( ) Home ( ) Work ( ) Other ( ) Home ( ) Work ( ) Other cormer Spouse(s) Home ( ) Work ( ) Other ( ) Home ( ) Work ( ) Other ( ) Home ( ) Work ( ) Other ( ) Home ( ) Work ( ) Other POST 2-251 (Rev. 12/90) Page 1 STATE OF Texas COUNTY OF Dallas ) 1994 On this 15th day of Mare-, , )UM, before me, a Notary Public in and for the aforesaid State personally appeared _Lonnie Samf orc� _ , known to me to be the Vice President of ANGUS PETROLEUM CORPORATION, which corporation executed the foregoing instrument, and acknowledged to me that such corporation executed the same. STATE OF CALIFORNIA COUNTY OF On 01/20/94 M. McLAREN AFiIANNA *: *= My COMMISSION EXPIRES February 23, 1998 } ORANGE }ss. } before me, personally appeared WAYNE A. CONDICT JO ANN T. JORDAN and Notary Public THE UNDERSIGNED personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature__�h } Qom& OFFICIAL SEAL ELISE ROBERTS NOTARY PUBLIC-CALIFORNIA ORANGE COUNTY 'My Comm. Exp. August 26,1994 me, a onally to be Y and and the (This area for official notarial seal) 'ublic